Home owners at risk as government cuts funding to mortgage rescue schemes
A Government funded scheme aimed at helping those home owners facing repossession is to be cut. Grant Shapps, the housing minister, has said that reducing the deficit to keep interest rates low would be more effective.
The Mortgage Rescue Scheme (MRS), allows people who would normally face repossession to sell part of their property to a housing association or local authority. However since it was launched in early 2009 only 629 households have been helped in this way with a further 1,849 applications in progress.
Mr Shapps said that the Mortgage Rescue Scheme needed to be "refocused" to offer better value for money, claiming that the funding was about to run out. It will be looked at again in the overall spending review.
Another scheme, the Home Owners Support Scheme (HMSS), which allows homeowners to defer up to 70% of their mortgage repayments if they have arrears, is to be retained as a backstop if interest rates were to rise. This scheme allows those homeowners that qualify to defer up to 70% of their mortgage interest payments if they have a sudden and temporary loss of income. So far only 34 people have been helped under this scheme.
DebtWizard comment
The number of those taking up the MRS has been disappointingly low as the previous government had set a target of helping around 6,000 home owners. As with the HMSS the qualifying procedure is quite stringent and would not be available to many other households so it has only helped a selected few.
Going through repossession is a traumatic experience and I should know as I went through it as a child when my parents lost their home many years ago. To save one home is rewarding but there need s to be a balance of the costs involved to run and fund such schemes.
If interest rates rise to fight inflation, as many are predicting, then for some home owners no scheme will save them and many more homes will be repossessed. I agree it is better to focus on keeping the deficit down and interest rates as low as possible in order to protect many vulnerable home owners, particularly the 2.8 million who are on tracker mortgages.
